German court upholds short-term home rental ban

BERLIN (REUTERS) - A Berlin court on Wednesday (June 8) upheld a city regulation that renders short-time home rentals in the German capital illegal, in a ruling with ramifications for firms like Airbnb.

Several home-sharing companies had lodged a complaint against an effective ban on short-term rentals in Berlin in the first substantial challenge to such city legislation in Europe.

"The availability of affordable housing is severely threatened in the entire city of Berlin and the regulation therefore justified," said judge Rautgundes Schneidereit, rejecting an argument that the regulation violated home owners'basic rights.

The European Commission said just a week ago that member states should ban "sharing economy" services only as a last resort. Ride-hailing app Uber has already retreated from Frankfurt and Hamburg in the face of fierce opposition from traditional taxi firms.

Rocket Internet's home-sharing website Wimdu said at once it would appeal against the ruling. The other three plaintiffs said they would continue to fight.

Airbnb, which says that over 20,000 Berliners shared their apartments last year, did not join the complaint as a plaintiff but a company spokesman said ahead of the trial that the verdict would affect Airbnb's business and it was watching closely.

Berlin's authorities said they estimated a total of 15,000 apartments were taken off the city's rental market for tourists as a result of the regulation.

People renting out their homes in the German capital for periods of less than two months face fines of up to 100,000 euros (S$148,236). Although landlords can seek a permit, city officials have said they will reject 95 per cent of requests.

"This is a sad day for all of Berlin and its visitors," said lawyer Peter Vida, representing Rocket Internet's home-sharing website Wimdu. "We will appeal this decision without a doubt."

Helge Sodan, the former head of the city of Berlin's constitutional court who drafted the complaint, had called the regulation unconstitutional, saying it violated property and equality rights, as well as the freedom of vocational choice.

The head of the Berlin-Mitte district council, Stephan von Dassel, welcomed the court's recognition of what he called an acute housing shortage. "Considering the influx of refugees and the situation of the homeless in our city we can also imaging converting vacation homes to shelter them," he said.

During the trial, city representatives said the law wasn't capable of solving Berlin's housing shortage but defended it as a necessary step to combat rising rents and a lack of affordable apartments.

Berlin is expected to grow by 80,000 people this year alone, with the record arrival of migrants straining the city's resources, and experts estimate Berlin is in need of 140,000 additional apartments.

Plaintiffs said the new law simply tried to turn them into scapegoats for a failed housing policy.

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